Medco Energi to sell gas from Aceh's Block A to Pertamina

PT Medco Energi Internasional Tbk, through its subsidiary PT Medco E&P Malaka (Medco E&P), has signed a gas sales and purchase agreement (GSPA) for Aceh’s Block A, with an amendment GSPA for the South Sumatera Block in Indonesia. The total gas volume is over 200 trillion British thermal units (Btu), equivalent to the total gas sales value of over $2 billion.

The GSPA with Pertamina for Block A will be used to supply gas demand in Aceh and North Sumatera provinces, especially for fertilizer and local industry. The final investment decision (FID) is targeted by mid-2015, and the gas supply is slated to begin by 2017 for a contract period of 13 years, with a total gas volume of 198 trillion Btu and a daily gas supply of 58 billion Btu per day. The agreed gas price is $9.45 per million metric Btu at the tie-in point of the Arun Belawan gas pipeline. In addition to Pertamina, the company will sign a GSPA with PT PLN (a state-owned electricity company) for 5–15 billion Btu per day by mid-2015.

The participating interest in this Block A PSC is Medco Energi (operator), 41.67%; KrisEnergy, 41.66%; and Japex, 16.67%. The Block A gas development is one of the company’s major projects. The GSPA is expected to bring revenues of $2 billion to the Government of Indonesia and PSC contractors with the distribution to the Government of $492 million, to the PSC contractors of $209 million, and also the cost recovery of $1.3 billion.

The company also signed the GSPA amendment with Perusahaan Daerah Mura Energi to fulfill the gas needs for electricity in Musi Rawas Regency, South Sumatera. Medco E&P will supply gas from South Sumatera Block with a total contract volume of 8,750 billion Btu for 11 years, with a daily gas supply of 2.5 billion Btu per day. Medco Energi has increased the gas price from $3 per million Btu to $6.50 per million metric Btu, with an escalation factor of 2.5% per year. This GSPA is expected to bring revenues of $66 million to the Government and PSC contractors.

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